Have a Tax Question? Ask a Tax Expert
Welcome and thank you for giving me the opportunity to assist you with your tax question.
As to your failure to file the appropriate FBARs, the following is information pertaining to penalties:
There are two types of penalties applicable to FBARs - (1) Non-Willful and (2) Willful. It should be noted that the penalties are assessed per account and not per FBAR. Additionally, the penalties are assessed for each year there is a violation. For example, if you have 5 accounts that have not been reported for 5 years, there could be 25 separate penalties assessed. The penalty regime for violations after October 22, 2004 can be summarized as follows:
Up to $10,000 for each negligent violation
No Criminal Penalties Assessed
Up to the greater of $100,000 or 50% of the amount in the account at
the time of the violation
Criminal Penalties of up to $250,000 or 5 years in jail or both
Willful Penalty While Violating Certain Other Laws
the time of the violation
Criminal Penalties of up to $500,000 or 10 years in jail or both
While the penalties can be overwhelmingly high, there have been a host of Voluntary Disclosure Programs offered by the IRS that can potentially reduce or even eliminate the penalties noted above.
Since your initial failure to file the FBARs seems to not be willful, my best advice would be to file them and all other information with the IRS as soon as possible because you know they should have been filed. It is always much better to furnish information to the IRS on a voluntary basis rather than waiting for the IRS to come after you.
Please let me know if you require additional information or clarification. Thank you.
While the maximum account balance was quite high ($25k), the owed tax might only be $200-400. Do you think it is likely that I'll have to pay $12.5k in penalties for a non-willful failure to disclose $200-400 in taxes? What is the penalty you expect they will assess?
I apologize for the delay; however, I responded to your question at 7:01 am today when you were offline. I have had appointments since that time and now have a break.
I gave you the information regarding what the penalty would be, but I cannot advise you how much of a penalty the IRS will assess. It has been my experience that the IRS is usually more understanding of persons who come forward with mistakes/oversights rather than waiting for the IRS to catch those mistakes/oversights. My concern is that you advised in your original question that there are multiple years involved.
Thank you for chiming in, Anne. I now understand that I need to give you a bit more time. I was panicking cause the FBAR deadline is June 30th...
I came at the end of 2009 on a spouse-green card when I married my U.S. wife.
I'm a German citizen.
I was really hoping to speak with someone who, from experience, can say how likely it is that they will assess that penalty. I was hoping by giving you an idea of the amount of money involved you'd be able to refer me to similar cases that you've handled in the past, and what the outcome was in those cases.
Although I very much appreciate you help, I'm not satisfied with the answer I received.
The IRS could assess penalties for your past failure to file FBARs, but you could contest the penalties. Moreover, if you reported all income from your foreign account(s) or wouldn’t owe additional taxes even if you had (for example, because of foreign tax credits), you should file an FBAR. if you don’t owe additional taxes, filing past due FBARs with an explanation is often advisable to clean up the past. If you didn’t disclose the accounts on your tax returns, owe taxes from the past, and didn’t file FBARs, you face a far tougher choice.
However, Although it has been my pleasure to answer your questions, please remember to pay the original expert.
I apologize that I got cut off.in mid sentence.
You asked us what the penalties were for not filing your FBAR in prior years, and that's what we answered.
You mentioned you were not "in the program" As far as I can tell, there is still an amnesty program....see below:
IRS Announces Efforts to Help US Citizens Overseas Including Dual